Corporate Lunacy In The Wake Of Katrina

CHING-CHING, CASH IN ON TRAGEDY! Part I Report Uncovers Corporate Lunacy in the Wake of Hurricane Katrina

Rita J. King is a colleague, a friend, and a fine freelance investigative journalist who has gone deep inside many nasty corners of society, business, and politics for the Village Voice among other publications. In 2003, the New York Press Association awarded her first place for investigative reporting on the nuclear industry and in 2005 she placed first in the NYPA news category for “The New Agent Orange,” an investigative article about nine soldiers who returned from Iraq and are now suing the government because they believe they were knowingly exposed to Depleted Uranium.

Her new work, completed just last month for CorpWatch, (corpwatch.org) a decade-old nonprofit monitor of all-things-corporate online, is called Big, Easy Money: Disaster Profiteering On The American Gulf Coast, a tirelessly researched and frightening insight into the rapacious milieu of scavenger business practices that inevitably follows the type of historic disaster that was Hurricane Katrina.

Now, one year removed from the litany of mistakes and tragedies that have rendered the gulf coast a watery graveyard, we find its reconstruction to be less than ethical, and in most cases, downright deplorable. I figure it’s high time Ms. King was given a proper voice at The Desk, because, for some warped reason, she is a fan of this space.

James Campion: How did you initially get involved with this story?

Rita J. King: I frequently write about Indian Point nuclear power plants, which a company called Entergy Corp. owns, and they’re headquartered in New Orleans, so I figured chances are there’s a story there. CorpWatch asked me to write a feature about Entergy, which, consequently, declared bankruptcy in the wake of Katrina, and has asked for a $718 million Community Development Block Grant so taxpayers and ratepayers can bail them out. There’s also an Entergy subsidiary in Mississippi that’s asking for a similar bail out. Between the two of them it is a billion and half dollar bail out to shelter the corporation from the cost. As I was gathering the information for the Entergy piece, CorpWatch asked if I would write the whole report.

So for six months I did hardcore investigative research on the contract procurement process, which involved scouring through all the records of contracts of prime contractors and government agencies, and I found the numbers to be very convoluted and unclear, but in the process I interviewed a lot of people who were beyond the focus of the scope of the report. And so my hope was to use the report as a platform to segue into some of the deeper social issues involved.

When you began the report, were you already assuming that there was likely to be some cloudy areas of where the relief money was coming from and how it would be spent, or even a fertile ground for corporate malfeasance?

“What I didn’t except to find, but came away with, is this feeling that the ‘bumbling bureaucrat’ image that used to pervade our thinking on these things has been replaced with a ‘fox in the henhouse’ image. Corporations are far savvier than the governments they manipulate and the politicians they enrich.”

Going in I knew this was the most pervasive disaster that had ever taken place on American soil. And I knew that some of the corporations that were notoriously profiting off the Iraq War were involved. I also knew that it was cheaper to do domestic disaster than foreign conflict, but I did not know going in what the specific ramifications were going to be and I did not go in assuming malfeasance was an issue as much as ineptitude – you have to keep in mind that FEMA was gutted in the 90s, and it has continued to be gutted, and as the Department of Homeland Security grows in the number and worth of contracts it gives out, personnel is being cut back. What I didn’t except to find, but came away with, is this feeling that the “bumbling bureaucrat” image that used to pervade our thinking on these things has been replaced with a “fox in the henhouse” image. Corporations are far savvier than the governments they manipulate and the politicians they enrich.

For example, on 9/7/05, a week after Katrina, President Bush suspended the Davis-Bacon Act, which protects workers’ wages. Two months of controversy followed. He reinstated it, but not retroactively, so all of the contracts that were given out during that time were exempt form the Davis-Bacon Act, which resulted in a lot of workers not being paid or being paid slave wages.

Then there is the contracting pyramid, wherein corporations benefit greatly from undocumented workers performing the labor at the bottom, because each successive subcontractor is only responsible for the layer below them. So, as a prime contractor, if I subcontract the work to you and you subcontract the work to someone else, and so on, I am not ultimately responsible for what the last subcontractor who hires the workers chooses to do, and whether they pay them or not.

Some of what I learned is shocking, and largely unreported. The two largest Chinese construction companies, Beijing Construction Engineering Company Unlimited and Beijing Urban International Company, have made a proposal to the city of D’Iberville, Mississippi through Gulfco Construction, which is actively trying to procure visas for thousands of Chinese laborers so they can work cheaply, and with their own materials, to rebuild vast swaths of the coast. Who is going to own those areas when they’re done?

So the cloudy numbers add up to hidden profits for those insidious enough to exploit the chaos?

Exactly. Prime contractors like AshBritt received $500 million, or $23 per cubic yard, to remove debris, according to an investigation conducted by NBC. At the bottom of their pyramid the company hired C & B Enterprise, which was paid nine dollars per cubic yard. That company hired Amlee Transportation, which they paid eight dollars a cubic yard, and they turned around and hired Chris Hessler Inc. for seven dollars a cubic yard, who then paid a debris hauler from NJ, who was paid three dollars per cubic yard, which is less than the cost of actually doing the work. So AshBritt gets paid $23 a cubic yard for nothing more than subcontracting.

I have to say this does not shock me.

AshBritt was listed in the Small Business Data Base as both a minority-owned and woman-owned company in order to tap into the federal regulation for set-asides, which stipulates that a portion of the contracts go to businesses owned by people who are categorized thusly (the same applies to other special groups, such veterans or physically disabled individuals). AshBritt’s owner, Randall Perkins, listed his wife, Cuban-born Saily Perkins, as the company’s president. However, I found a list of 2004 campaign contributors compiled by the federal election commission that listed her occupation as homemaker. Perkins later claimed it was a clerical error.